The Czech Republic's Commercial Bank: Komercni Banka

Edward Snyder and Roger Kormendi

No 6, William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: Important elements of the transactional structure that created and partially privatized Komercni Banka, the Czech Republic's largest commercial bank, include antecedent actions that determined the bank's management and established its commercial loan portfolio, a decision against splitting the bank's operations into smaller organizational units, the reliance on voucher privatization, and limited post-privatization financial support. The main feature, however, is the government's decision to retain control and majority ownership of Komer6nf. Our analysis of the bank's subsequent credit allocations yields evidence of the government's preference for a deliberate rather than a quick move toward market-driven decision-making. The opportunity to privatize a strong bank and harden enterprise-level budget constraints quickly was foregone, or at least postponed, in favor of creating a protected bank that would deal more leniently with Komercni's politically-vested commercial clients.

JEL-codes: G21 L21 P34 (search for similar items in EconPapers)
Pages: pages
Date: 1996-12-01
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